A merger reserve, also known as merger capital reserve, is credited in place of a share premium account when merger relief is applied. Goodwill on consolidation may be written off against a merger reserve, unlike the share premium account.
The minimum premium value refers to the lowest permissible amount by which the book value or issuance cost of shares exceeds their par value, commonly recorded in a share premium account.
Preliminary expenses are the initial costs incurred during the establishment of a company. These expenses often include costs such as issuing shares and can be written off to the share premium account.
Redeemable shares are equity or preference shares in a company that the issuing entity has the right to buy back, under predetermined terms specified at the time of issue.
In accounting, a reserve refers to a part of a company's capital, other than its share capital. This capital can largely arise from retained profits or from the issuance of share capital at more than its nominal value. Reserves differ from provisions as they represent undistributed surpluses, with some being non-distributable. Directors may earmark these funds for specific purposes.
Share premium is the amount payable for shares in a company that is issued by the company itself, in excess of their nominal value. The premium received must be credited to a share premium account, which is restricted in use and cannot be utilized for paying dividends to shareholders.
A share premium account records the amount received by a company over and above the par value of its shares. Such balances are used for specific purposes under regulatory stipulations.
A share issued at a price above its par value is referred to as being issued at a premium. The premium is the difference between the issue price and the par value of the share.
Undistributable reserves, often termed capital reserves, refer to specific reserves that cannot be distributed to shareholders as per the stipulations of the Companies Act, various statutes, or a company's constitutional documents. These reserves ensure the financial stability and compliance of a company.
